Melrose says its profit in the fiscal first half came in 90% lower due to COVID-19

Melrose Industries plc (LON: MRO) said on Thursday that its profit in the first six months of the current fiscal year tanked by 90% due to the Coronavirus disruptions. In recent weeks, it expressed confidence, signs of recovery in several of its markets except aerospace were evident.

Shares of the company opened about 9% up on Thursday. The stock continued its gain and jumped another 5% in the next hour. Melrose Industries plc is now trading at 112 pence per share versus a low of 74 pence per share in the first week of April due to COVID-19 restrictions. Confused about choosing a reliable stockbroker to trade online? Here’s a comparison of top stockbrokers to make selection easier for you.

Melrose operating profit slides to £56 million in H1

The company had previously suspended dividend payments to cushion the economic blow from COVID-19 in July. It had also expressed plans of restructuring its workforce for GKN aerospace division. Many of its workers in the U.S., Europe, U.K, and China, it had warned, will lose their jobs. Its aerospace business employs a total of 18,550 people worldwide.  

Melrose didn’t specify the number of jobs that are likely to be cut but highlighted on Thursday that negotiations are ongoing and the layoff is expected to be implemented next year in the first quarter.

The London-based firm specialises in acquiring underperforming companies. It finds new owners to turn around these businesses. According to Melrose Industries, buying opportunities are likely to remain strong in 2021.

In the fiscal first half that concluded in June, Melrose valued its adjusted free cash flow at £213 million. In terms of adjusted operating profit, it recorded £56 million as compared to a much higher £541 million in the same period last year.

Melrose reports a 25.8% decline in H1 revenue

On the revenue front, the company saw a 25.8% decline to £4.36 billion in the fiscal first half. Its Nortek Air Management unit, Melrose added, generated 13% higher sales in the last two months. Nortek will be reviewed at the start of the next year for strategic options.

In related news from the United Kingdom, the e-commerce company, The Hut Group, expressed plans of £920 million float on the London Stock Exchange.

At the time of writing, Melrose Industries plc has a market cap of £5.46 billion and a price to earnings ratio of 86.62.